Netflix Inc. would like to thank you for attending its cash bonfires over the years, but says it¡¯s time to go home now ¡ª and watch more Netflix.
The streaming-video company stunned investors Tuesday by announcing that it is ¡°very close¡± to becoming a true cash-flow-generating company and that it no longer needs to borrow to finance its day-to-day operations. Translation: The money-torching stage of Netflix¡¯s evolution is coming to an end as it gets closer to becoming legitimately profitable.
This revelation, which came in the release of fourth-quarter results, is significant because it would seem to firmly rebut the biggest longstanding argument against owning Netflix shares ¡ª that the business can¡¯t sustain itself. After all, this is the same company that burned so much cash in 2019 ¡ª more than $3 billion ¡ª that its logo should¡¯ve been a flame. At the time, Walt Disney Co.¡¯s film studios were earning that much, while its theme parks and other vacation-oriented business lines were pulling in more than $6 billion in operating income.
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